A 17-year-old Dutch teenager was arrested this week on suspicion of stealing furniture worth £2,800 from a hotel room. Four other teenagers were also questioned about the offence. It is believed they moved the stolen furniture into their own hotel rooms. Such a minor incident might not have merited a paragraph in the local paper had it not been for one extraordinary detail of the case: the crime happened not in real life but in a "virtual" hotel in the three-dimensional world Habbo Hotel, a children's game that only exists on the internet.

It was of interest to the police not just because it was the first time it had happened in the Netherlands but because the currency used in the virtual world - Habbo credits - is exchangeable for cash: a real crime had been committed in a virtual world, in this case by hacking into the accounts of other users.

This is not an isolated incident. Virtual worlds are becoming the next big thing as the internet evolves into three dimensions. Some pundits predict they will be as important as the industrial revolution. Entropia Universe, the Swedish virtual world, which had a turnover of $365m last year - and will soon become the first virtual world to be floated on the stock market - already enables users around the world to draw down money earned inside the game at ordinary cash dispensers. It is still a puzzle to many people how virtual goods that have no existence outside the computer code that generates them can be worth real money. But anything has value if people are prepared to pay for it.

That is why users of the social network Facebook have started paying money to send "virtual flowers" to their friends. It is why someone in the virtual world there.com paid $83 in an auction for a "virtual" Levi jacket, albeit a limited edition, for their avatar (three-dimensional representation of themselves) when a real-world one cost $78.

Habbo, owned by a Finnish company, Sulake, boasts 80 million members - bigger than most countries - of whom more than 7 million are regular users. It overwhelmingly attracts younger people who are given their own cartoon-like avatar and private room that they can decorate how they like and where they can entertain their friends. In a world being taken over by social networking, these spaces, where like-minded people from anywhere in the world can meet, have obvious attractions. Because of the preponderance of children, bad behaviour is taken very seriously. It was Habbo that reported the crime to the police.

Some other countries have already been grappling with the challenge of how to police virtual worlds for some time. Most police stations in South Korea, the most advanced cyber-economy in the world, have cyber patrols to deal with the increasing outbreaks of criminal activity in virtual worlds, from gaming frauds or money laundering to straight theft. There have even been reports from the country of virtual gangs of avatars demanding that beginners give them virtual "protection money".

If this kind of crime has so far been mainly a concern for the young and geeky, experts warn it could soon affect most of us as virtual worlds move into the mainstream. Steve Prentice, chief of research at the research organisation Gartner Research, predicts that in a few years' time 80% of all broadband users will have avatars. Millions of young people reared on multi-player games such as World of Warcraft have already adapted to it and they are being joined by corporations such as IBM which see that online worlds where games are played are now evolving into real economies where profits can be made. Corporations are already using virtual worlds as a place where executives (through their avatars) can meet instead of jetting managers to airport hotels around the globe.

The most dramatic example is happening now in China, where a consortium of government and private capital is investing $30bn in a 100 square kilometre site - that's around six miles by six miles - to build the Beijing Cyber Recreation Project. Among other things this will house the infrastructure (computer server farms, electricity, online banking links, transport logistics etc) to host nine or 10 virtual worlds, each of which will be capable of supporting over 150m avatars. The Chinese are not constructing virtual worlds for fun; they are deadly serious. Although online games will be part of the mix, the underlying strategy is strictly economic: to boost the profits from the country's booming industrial base.

At present a Chinese manufacturer selling a shirt might only get $1 despite the fact that it might sell in London for $20. But if buyers from around the globe can be lured into virtual malls (think Amazon in three dimensions) they can buy direct from the Chinese manufacturer at a cheaper price, capturing all the wholesaling, retailing and delivery profits for China. If China's approach is successful - and applied to more goods, from toys to cars or computers - western economies could face serious problems. At the moment they are managing to survive the collapse of manufacturing partly because low-cost Chinese goods means they enjoy low inflation while retaining the bulk of the value-added generated by the goods as they travel to customers from Chinese factories. If they lose that, there is nothing obvious left to take its place.

China's virtual worlds are also intended to enable people to work from home (through their avatars) to stem migration from the countryside to towns, either by supporting the existing manufacturing effort or making "virtual goods" that are only consumed in virtual worlds such as furniture, clothes, art or buildings. This is already a booming activity in existing virtual worlds.

Beijing is also inviting global corporations such as Cisco and IBM and other virtual worlds to set up in the new recreation district to take advantage of state of the art infrastructure and cheaper Chinese skilled labour. It will prove a difficult offer to resist for multinationals seeking to reduce their international cost base. Not content with being the manufacturing centre of the world, China wants to be the centre of virtual services as well.

Where is this leading us all to? When asked whether what was happening in virtual worlds was on the scale of what happened during the agricultural and industrial revolutions, Robert Lai, chief scientist of the Beijing project, said: "It will be faster, bigger, more like an explosion." But China will still have fewer avatars per head of population than South Korea, where 43% of the population is a member of the virtual space Cyworld. It can best be described as a one-stop shop for all things virtual and social, having most of the features of western internet spaces such as MySpace, Second Life, Amazon and eBay. Some 90% of all picture messages in the country are cameraphone pictures uploaded to Cyworld. Korea has built the advanced infrastructure to support it, 90% of households enjoying broadband many times faster than in Britain.

As a new book, Digital Korea, by Tomi Tahonen and Jim O'Reilly, points out, once you have two out of every five members of the population in your virtual world, "the whole economy takes notice and every company wants a presence". It adds: "In Korea, every consumer brand has to be inside Cyworld. 300,000 businesses offer over 500,000 items of digital content for sale already". Cyworld, Entropia and Habbo are merely three of more than 50 virtual worlds competing for supremacy. The philosophies of these worlds vary from being ultra-libertarian like Second Life to Entropia and there.com, which have strict rules. Control may have been one of the reasons MindArk, the company behind Entropia, managed to secure the contract for one of the Bejing virtual worlds.

Ben Richardson, vice-president of there.com, which has a million members (half of them female with an average age of 22) believes virtual worlds have a great future as places that emphasise self-expression and new experiences "unbound by real-world physics and economic boundaries". Corey Bridges, executive producer of Multiverse (which provides virtual worlds for others and only charges when they start to make a profit), believes that virtual worlds will soon be bigger than the entire entertainment industry is now.

He observes: "Virtual worlds are instantaneous while Facebook is timelagged". Among numerous other worlds springing up is Stardoll, with more than 6 million users, 93% of them women who dress up celebrity dolls. Apparently guys just don't get it.

A triggering point for wider adoption of virtual worlds could be an application that, curiously, been absent until now: football. And it could come from Britain. Malcolm Clark, aged 44, is raising almost £7m to launch FootballSuperstars.com in May, enabling users to play anything from a casual five-a-side on a playing field to a full team game in a virtual stadium watched by spectators. He is hoping that 20 million to 30 million people around the world will join what he claims will be "the closest thing to real football that anyone has done".

A key indicator of how important virtual worlds could become is what leading corporations or brands are doing. At last month's Virtual Worlds Forum in London a succession of presentations showed that companies had moved on from launching products or opening malls in Second Life to gain instant headlines to thinking about strategies.

There was agreement among companies such as IBM and Diageo, the multinational drinks group, that working in virtual worlds was a good method of conducting collaborative projects, co-development, conferences, ideas generation, training and events. Joe Little of BP said that remote working was becoming the default way of running collaborative projects.

BP has found that a virtual world environment was particularly good for conducting anonymous counselling. Diageo said that holding meetings virtually saved hundreds of thousands of pounds if not millions and feedback from employees was "outstanding": 90% of participants thought it was better than similar real life occasions. IBM, which has 5,000 people working virtually already, is a leader in the quest to make virtual worlds inter-operable so allowing you to take your avatar from Second Life into Entropia Universe en route for Habbo Hotel.

Failure to agree standards would mean that virtual worlds would not be able to exploit their full potential and would become silos that did not communicate with each other, rather like mobile phone operators. The unanswered question is whether the hundreds of millions of people using the booming "time-lagged" social networks such as MySpace, Bebo and Facebook will migrate to the instantaneous virtual worlds that enable you to hook up in real time with other avatars across the globe.

While casual visitors to the fascinating but over-hyped Second Life often do not come back, scientists, education institutions, arts groups, architects, pop groups, health workers and, of course, the sex industry, are still hard at work there exploring its limitless possibilities from building shopping malls to pop groups composed of members residing in different countries but playing in live gigs to a global audience.

One example of the new seriousness is that Nanotechnology Island (backed by Britain's National Physical Laboratory) was recently launched to establish a place for the nano-science and technology communities - currently dispersed in different parts of the world among different academic disciplines - to work together to trigger public discussion.

There is a real possibility of a whole new world opening up of people who not only work in virtual international offices from their own homes but manufacture goods that are made and consumed in a virtual environment. The virtual flowers being traded in Facebook may be the beginning of something we are only just beginning to comprehend.

Users create a virtual version of themselves, which could be true to life or a 10ft purple dragon. You can do more or less what you fancy: shopping, chatting, attending lectures, dating. Waves of brands - such as Reuters, Toyota and even Duran Duran - have a presence and there are claims its virtual economy turns over $1.5m (£750,000) every day. The site claims millions of users. Second Life was founded by Philip Linden.

A game rather than social world: players have missions such as fighting monsters, fulfilling quests and spellcasting.

80mThe number of avatars in Habbo, where furniture worth £2,800 was stolen from a virtual hotel room

$83The amount paid for a virtual Levi jacket at auction. A real one cost $78

Jemima Kiss

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